This article was originally published on ChipFilson.com.

The headlines scream about the new reality in NCUA’s regulatory failures: “NCUA Call Report Reveals Stunning $103 million Loss at Jackson Area FCU”

The first paragraph from the CU Today article says it all: “New NCUA Call report data shows Jackson Area Federal Credit Union’s financial condition has deteriorated dramatically following the agency’s discovery of an alleged $95 million fraud scheme, with the credit union reporting negative net worth of $88.5 million and a negative net worth ratio of 145.4% as of June 30…

The revised financials show total assets plunged…from $162.4 million at year-end 2025 to $60.9 million (at June 30, 2026)…The credit union also posted a year-to-date net loss of $103 million compared with $1.23 million in net income for 2025….(this outcome) reflects the financial fallout from what the NCUA has alleged was a years-long financial fraud orchestrated by former CEO Leigh Bridges…”

Or, the August 7 headline in CU Daily: “Just 6 Months After Opening, NCUA Liquidates African Diaspora FCU.”

In 2024, the NCUA had no involuntary liquidations. From April 30, 2025, to July 2026, there have been eight. (link)

The impact of a leaderless credit union regulatory agency

As the NCUA inaugurates a new Chair in John Crews, he will inherit an agency that has had no administrative or policy leadership.

Kyle Hauptman’s solo tenure as Chair was notable in its Trumpian implementation of de-governance. The DOGE-initiated practice of downsizing staff, extended exam schedules, and even the inability to hold regular board meetings for accountability has created an environment of lawlessness. That is, the NCUA is not able to perform its expected statutory oversight. In financial services, this is leading to situations in which one can only ask with the well-known phrase, “Who let the dogs out?”

The industry has taken note, and the forces of greed and ambition are running amok. Hauptman liked to describe NCUA as just a “big insurance agency.” Now credit union members will be paying the bills for the growing demonstrated failure of government’s fundamental role of protecting members’ funds. This increasing failure of oversight through both policy and practical ineffectiveness betrays the people’s and the cooperative movement’s trust in government’s basic role of enforcing the rules and regulations.

Growing deterioration

The April 2025 date in the above table is significant. On April 16, 2025, President Trump fired the two democratic board members, leaving Kyle Hauptman a solo board Chair. The agency’s first major initiative was to implement dramatic staff cuts.

May 21–22, 2025: The agency reported that nearly 300 employees initially enrolled, leading to an expected final exit of over 240 staff members. In public, the NCUA stated the workforce cuts were manageable. “We’re going to manage this through modest and sensible adjustments,” Executive Director Fazio said, noting the agency is planning to carry out staff reassignments, temporary promotions, and other measures to maintain key functions.

The precursor: a 26-year fraud at a federal credit union

Warning signs had already appeared. In the second quarter of 2024, Creighton FCU reported a dramatic $13.5 million loss (over 20% of its assets), which was “resolved” by merging the suddenly insolvent credit union into Omaha’s Cobalt FCU (now Centris).

The agency explained the loss was due to decades of financial fraud by the CFO in a December 17, 2024 letter to Congressman Mike Flood from NCUA’s Inspector General. The fraud had gone undetected for 26 years. It was only discovered after the CFO died in April 2024. From the letter:

“NCUA officials told us that fraud auditors determined that the CFO hid this $12 million deficit by exploiting the credit union’s weak accounting system that allowed him to back post, forward post, delete transactions, and hide general ledger accounts when generating reports for annual financial statement audits and NCUA examinations. NCUA officials believe the former CFO used the “Unapplied Data Processing” account as a suspense account (a temporary account that holds transactions that are not yet categorized or classified) for all transactions he did not know how to post. In one instance, the former CFO appeared not to want to show high dividend expenses, so he posted the expense to the Unapplied Data Processing account. In another instance, he used the “77777-No Name” account to offset and hide large deficits when he ran financial statements during annual CPA audits and NCUA examinations.”

But instead of reviewing NCUA’s examination records, the Inspector General shrugged off any responsibility to review how 26 years of federal examinations could have missed this growing sinkhole in Creighton’s balance sheet.

What, Me Worry? ( by Alfred E. Neuman)

On NCUA’s examination effectiveness, the IG kicks the can down the road, apparently not bothering to look at recent exam history. In a classic Not My Problem excuse, the IG wrote: “To assess the effectiveness of the NCUA’s examination and oversight processes in detecting and preventing financial irregularities, my office would need to conduct an audit. The OIG’s 2025 Annual Work Plan includes a planned audit to review the NCUA’s Total Analysis Process (TAP), which will address the effectiveness of the NCUA’s examination and oversight processes.”

On the external CPA audits conducted since 1999: “We are unable to assess the CPA’s performance in this case as we have no access to Creighton’s records or access to the CPA firm’s audit records and workpapers.”

The IG who signed this non-responsive letter was one of hundreds of NCUA senior staff members who took an early buyout in 2025.

What awaits John Crews and the credit union movement

It is no coincidence that each of the above examples has the word “federal” in the credit union’s charter. There are more credit unions whose future financial outlook increasingly looks like they are circling the drain.

For example, take this multi-year failure in CEO and board leadership at the recently merged Civic Federal Credit Union. In just one year, its net worth has fallen from 8.8% to 5.8% even as assets have fallen another $600 million. The credit union continues to lose members, shares, and public credibility. Its operating loss for the first six months of 2026 grew to $47 million. This downward financial death spiral has been underway for almost three years.

This does not mean that state chartered credit unions do not have real problems as well. But those regulatory agencies have not been caught up in DOGE-like firings. Many, however, still take their regulatory lead from NCUA.

The movement is at a turning point. John Crews inherits a very flawed agency in the throes of a governmental ideology that undercuts the necessary public accountabilities of regulation. There is a saying that “change doesn’t come from Washington, but to Washington.” Hopefully Crews’ leadership can be the exception to that rule. For the sake of over 100 million coop member-owners.